Time is running out for a funding deal to rescue the BBC, insiders warned, with the corporation yet to agree with Government on how to replace the “busted flush” licence fee.
The corporation is facing a £500m funding black hole as rising numbers of people stop paying the £180 TV licence.
Ministers are set to publish a White Paper in December, setting out a new funding mechanism to put the BBC on a “sustainable” financial footing.
There is mounting concern within the BBC that this timeline could slip into next year, leaving the corporation in further limbo and meaning viewers could face further cuts to programmes and channels.
Any changes would need to be place by the end of December next year. This is when the BBC’s current royal charter – which sets out how the corporation operates and is funded – runs out.
Meanwhile, tensions are rising behind the scenes over the BBC’s plans to save £500m by cutting 2,000 jobs.
Whitehall insiders say Culture Secretary Lisa Nandy has questioned why the deep and unpopular cuts to programmes and services have been announced while White Paper negotiations are still under way.
“The BBC is facing financial pressures but it is not in the kind of dire straits that some of these cuts would suggest,” said one figure with knowledge of the discussions.
‘Clock ticking’ down on BBC future
Director-General Matt Brittin has called the licence fee a “busted flush” which is outdated in the streaming age.
The BBC has suggested replacing it with a household levy paid by everyone, but at a lower rate than the current charge.
But the Treasury is understood to oppose any proposal which could be presented as a new tax on households already facing a cost-of-living crisis.
With its cash reserves drained and licence fee cancellations hitting 539,000 last year, the BBC says it has no choice but to make immediate 10 per cent cuts across its services, in a bid to save £500 million.
BBC cuts have so far seen a raft of Radio 4 shows scrapped including You and Yours, 90 jobs to go in a consolidation of local radio and regional TV news and the mooted closure of entire broadcast channels, such as youth service BBC Three.
A senior BBC source said: “The clock is ticking if there is going to be a White Paper agreement before the Christmas recess. Time is running out.
“No organisation can plan its finances when it has no idea what its funding situation will be in 18 months time.”
White Paper could deliver a ‘fudge’
Government sources said Nandy was still discussing options to reform the licence fee with the BBC and no final decision had been taken.
She is committed to putting the BBC on a sustainable financial footing for the long-term, they added.
But a former government adviser on media policy said: “It’s too late to agree a major overhaul of the licence fee by December which can be introduced in 2028.
“The danger is the White Paper just delivers a fudge or transitional arrangement that has to be revisited.”
A BBC deal rests in large part on the chemistry between Nandy, a close ally of Andy Burnham, and former Google president Brittin.
Speaking at a private reception hosted by the BBC at the conference, Nandy said the corporation needed to go further on devolving programme-making and commissioning power to the regions but gave no assurances on future funding, The i Paper understands.
The BBC has announced plans to shelve proposals for a dedicated Birmingham studio for The Archers, and stop recording the agricultural radio soap in the city for the first time in 75 years.
But Richard Parker, Labour & Co-op Mayor for the West Midlands, said on Wednesday after “constructive” discussions with Brittin he is “encouraged” keeping the show in Birmingham “remains on the table.
“Let’s be clear: The Archers belongs here,” he said.
One industry insider also said Nandy “can seem disengaged with the brief”. They noted she gave just a passing mention to the BBC in her Labour conference speech, which focused on online safety.
Allies of Nandy rejected the suggestion. BBC Deputy Director-General Rhodri Talfan Davies also recently described her as “very constructive” in discussions, with a clear understanding of “the importance of this moment for the BBC.”
Internet levy proposal
“A lot of progress has been made in talks over the new Charter. The discussions are positive,” another senior BBC figure said. “We are probably coalescing around reforms to the licence fee that puts the BBC on sustainable footing. But everything is contingent on that funding solution.”
Other proposals to replace the licence fee include a broadband levy, a monthly surcharge on streaming platform bills and a supplementary payment on devices used to watch video and play podcasts, such as mobiles and laptops.
Although the BBC may not get its preferred funding solution, the White Paper could give the broadcaster other long-term benefits.
These include guaranteed prominence on online apps and an increased borrowing facility allowing its commercial wing BBC Studios to invest in new shows and tech start-ups.
The new BBC Charter could also require the BBC to meet stringent minimum hours of news and education programming and commit the broadcaster to investing more in the nations and regions, a central policy of the Burnham administration.
World Service funding on the table
As part of the talks, BBC is also lobbying the Government to take back responsibility for funding the World Service, which it did until 2014.
Currently the Foreign, Commonwealth and Development Office provides about a third of the budget, with the BBC licence fee covering the rest, The i Paper understands.
“The UK licence fee payer will ask why they are paying for an international service which projects British ‘soft power’ values of independent journalism across the world,” a BBC News journalist said.
Foreign Office sources said the Government was “open-minded on how the World Service is funded”. The current Charter Renewal debate was “the right moment to look at potential long term sustainable and predictable funding mechanisms.”
‘We need a new funding mechanism’
The BBC was approached for comment.
Sources pointed to Brittin’s recent comments where he said the BBC was “having to make half a billion pounds of savings and we don’t yet know what our future financial agreement will be. We need a new [funding] mechanism if we’re going to have the sort of scale of Public Service media that we’ve had in the past.”
A DCMS spokesperson said Nandy is “heavily engaged in the future direction of the BBC”. This has been “made clear in numerous meetings, speeches, visits and interviews”.
“She has made this Charter Review a clear priority, with the aim of putting the Corporation on a sustainable financial footing, so that it has the resources it needs to continue to deliver for the country.”
They said the White Paper will be published “in due course”.